Year by year, Americans fall deeper into credit card debts. It's not news that most credit users make the minimum payment only. For some customers, carrying their balance from month to month appears to be the most convenient option. Meantime, the others simply cannot pay more than the minimum.

Creditors will have to disclose the information about the true costs of credit card minimum payments in the nearest future. The Credit Card Minimum Payment Notification Act requires lenders to add some essential points regarding the consequences of making minimum payments only to cardholders' monthly credit card statements. How do monthly minimum payments affect your family budget? Should you pay more and why? Read on for more information.

The credit minimum payment on your credit card is calculated as a percentage of your current balance. It may vary from 2% to 5%, it mostly depends on the creditor. On the one hand, it seems that paying less is better than paying big sums. On the other, it makes sense to pay off the debt as soon as possible in order to reduce the amount of interest rates.

Actually, most credit users feel quite comfortable paying just the required minimum due to the suggestions of lenders. The problem is, how much time does it take to pay the entire balance using this method?

Let's assume that you carry the average credit card debt of $10,000 on your cash back credit card. Taking into consideration that your interest rate is 13.24%, and you pay the balance by making the minimum payments only, it will take you more than 30 years to pay off the entire balance. Would you really like to spend the rest of your life paying off the debt?

Consumer advocates blame creditors for the guidelines that lead to the ever-increasing debt, and hopefully they will succeed in making credit card rules more transparent for regular customers. The root of all evil on their opinion, lies in credit card statements, or it would be better to say that creditors don't give the necessary information about the potential consequences of making minimum monthly payments.

Let's take a closer look at the Credit Card Minimum Payment Notification Act! The proposed bill requires lenders to add some essential information to monthly credit card statements. For example, creditors are to warn their clients that paying the minimum only will increase their interest rate and the time to repay the debt.

According to this bill, creditors are to give examples explaining how much time it will take them to pay off the debt, and how much money they will spend using the above mentioned method of credit card payments. Though all these requirements sound quite reasonable, it's so hard to imagine a creditor who will obey these rules.

On top of that, lenders are to provide customers with a toll-free number in the frameworks of this legislation. This way, consumers paying the minimum, may count on the assistance of their lender. In other words, creditors are to estimate the time and funds needed to pay off the debt.

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